EIA: Shale gas boom countering production decline on federal lands

A sign for the Winter NAPE 2011 event is installed in the exhibit hall at the George R. Brown Convention Center in Houston. (Nick de la Torre / Houston Chronicle)

Natural gas production continues to be strong in the U.S. as firms tap shale plays that are largely on private lands, even as production on federal lands has fallen, an Energy Information Administration official said Wednesday.

EIA Deputy Administrator Howard Gruenspecht spoke about the role of public lands in U.S. energy production during the annual Summer North America Prospect Expo at the George R. Brown Convention Center in Houston.

The conference is a three-day marketplace of oil and gas land trading. BNSF Railway CEO Matthew Rose was among the speakers scheduled to address the attendees.

Gruenspecht said that with natural gas prices remaining low, there hasn’t been much incentive to produce it offshore in the U.S. So most of the growth in natural gas production has been focused onshore.

Since 2003, he said U.S. natural gas production has increased on private lands, while it has declined on federal lands.

“Coal overlaps with federal land much more than oil and gas,” he said.

As for recent trends, Gruenspecht said EIA projects there will be modest growth in energy consumption from now until 2040. He said U.S. net oil imports are expected to decline to 7 percent in 2040 if resource recoverability remains high. The U.S. will become a net oil exporter with additional demand reductions, he said.

Also at the conference, there was a lot of discussion about merger and acquisition activity in the industry.

IHS’ Dan Pratt said there has been a record amount of spending in the M&A arena in the last 10 years, especially in North America. At the same time, there has been a bit of a lull this year as exploration and production firms focus more on land development than land acquisition.

“Spending is the big challenge for the E&P sector,” Pratt said. “Will this sector have the capital wherewithal to develop the significant resources ahead of them that are available?”

IHS senior research director Pete Stark spoke about the infrastructure bottlenecks that exist in U.S. oil and gas production. He said the pace and scale of projects to balance the supply surge is unprecedented.

Ron McClain, president of products and pipelines at Kinder Morgan, also addressed supply and demand issues, especially the growth of shale production.

“Shale is everywhere,” McClain said. “It’s almost coast to coast. It’s predominant across the country.”

While shale is everywhere, he said it won’t be produced everywhere because “people make choices.”